For the market last week, it was time for wallflowers to finally join the party.

It wasn’t simply that all three major indexes rallied to new all-time highs, but that the tenor of the rally appeared to have changed, as well. Sure, the Dow Jones Industrial Average gained 586.43 points, or 3.1%, to 19,756.85, leaving the blue-chip benchmark just 243.15 points away from 20,000. The Standard & Poor’s 500 index rose to 2,259.53, and the Nasdaq Composite, which had been trailing for so long, climbed 3.6%, to 5,444.50.

Yet for the first time since Donald J. Trump’s victory in the 2016 election, the split between apparent winners and losers under his presidency began to narrow. Yes, the financial sector continued to top the S&P 500 after gaining 4.8% last week, but technology, which has been bringing up the rear in recent weeks, was a close second after rising 4.2%. And even health care, which tumbled as much as 2.2% on Wednesday after Trump criticized drug pricing, managed to finish the week in positive territory.

“Instead of health care dragging the market down, the market pulled health care along for the ride,” says Instinet’s Frank Cappelleri.

What’s behind the sudden shift? A big, heaping dose of confidence. On Friday, the University of Michigan’s preliminary consumer confidence index for December rose to 98, the highest reading since January 2015, and is nearing its highest level since 2004. And in a report released last week, Bank of America Merrill Lynch economist Michelle Meyer, after perusing the available anecdotal evidence from company earnings calls and other sources, noted that “there is more optimism about the economy following the election.”

If Trump’s tax cuts and spending plans become reality, that could create a virtuous cycle where “the gain in animal spirits could amplify the boost to the economy from fiscal stimulus,” Meyer wrote.

(Source: Barrons Online)